The slight sharpening during conversion has "reversed/hidden" some of the softening that occurred. The softening happens to all pixels and the sharpening too - you are not seeing all the diffraction "loss" but have also seen how it can be reversed up to a point. All you need to do now is print that composite image at a range of sizes and view the prints as you would normally. You'll see that the range of apertures that look sharp in the prints may be broader than at 100% pixel peeping. You will then be in a position to make your own, real-life tested judgement on when to "worry" about diffraction. So, for example, if you are taking a shot that you know won't be printed large, you can stop way down to 22 (or even further, maybe) but if you know you might want to print a large print of a landscape/sunset/Schnapps bottle/whatever, you'll know how far you can stop down before seeing an undesirable level of the effect. Who needs theory, when you have your own data for your own workflow?!